One of the grounds in which a Will can be challenged is lack of capacity.
The test for capacity was established as far back as 1869 in the case of Banks v Goodfellow, which set out a 4 limb test:
- a) Did the deceased understand that they were making a will and the effects
- b) Did the deceased understand the extent of their estate
- c) Did the deceased understand as to those who would have claims on the estate
- d) Was the deceased impaired by any disorder of the mind or delusions
This has been followed and applied by practitioners and the court for hundreds of years without issue.
Then the Mental Health Act 2005 (“MCA”) came into force on 1st April 2007 which was established to “make new provision relation to persons who lack capacity…”
The MCA test for capacity is:
An inability to make a decision for himself which is based on whether he can
i) Understand information relevant to the decision,
ii) Retain that information,
iii) Use or weigh that information as part of the process of making the decision,
iv) Communicate his decision
The MCA also introduced a presumption of capacity.
It was not clear in 2007 whether the correct test for capacity was still Banks or now the MCA. Cases since have tried to resolve this controversy.
Scammell v Farmer (2008) found that the MCA did not apply as it was not introduced to apply to testamentary capacity.
However in Perrins v Holland (2009) the judge held that the MCA had replaced Banks. In both cases, the decisions were made obiter and no arguments were properly explored.
In the more recent cases of Fischer v Giddley (2013) and Bray v Pearce (2014), the courts held that there was not a conflict between Banks and MCA, rather the MCA was a supplement to Banks and could be adopted in addition to Banks where appropriate.
In Walker v Badmin (2014) the issue finally came to a head and was fully contested and adjudicated on. The court decided that the correct test is that laid down in Banks. They highlighted that there were differences between the two tests (namely the burden of proof, degree of understanding of information and the degree of understanding of consequence of making a will). They felt that the test in MCA only applied to living persons who lacked capacity so there was no overlap with Banks; one applied for prospective determination of capacity and one for retrospective. But it does seem peculiar that the test of capacity should be different depending on whether you are alive or dead.
We then had the case of James v James (2018) decided just last month in which the issue arose again for judicial determination. Walker was followed on the basis that MCA was not specifically brought in to deal with testamentary capacity and we already had a well-established and long standing test which had been built on 300 years of case law and was working fine.
But that is unfortunately not the last word on the matter. As part of the Law Commission Consultation on Making a Will, and despite Walker and James, it is being proposed that the MCA test be adopted for testamentary capacity, supplemented by the MCA Code of Practice. However, given that the findings of the Law Commission are not expected until at least mid-2019, it is not clear this recommendation will ever make its way into the statute books.
Ultimately, does it in fact make a difference? Simon v Byford (2014) shows that it can. The deceased made two wills – one in 1996 which left, amongst other things, the majority of the shares in the family company to a son, and one in 2005 which divided most of the estate equally between the children, including the shareholding. On appeal, the court upheld the first instance’s decision that the deceased did have capacity for the second will. The deceased (under the Banks test) was not required to appreciate that the equal division of the shares meant a deadlock situation, as that went beyond the test and would have required the deceased to have taken into account her son’s own shareholding. If the MCA test had been applied, and the reason it didn’t was because the will had been made prior to its enactment, it could very well have gone the other way given the requirement to consider ‘all relevant information’.
However, this is a rare case which falls between the two tests and so when instructing an expert or witness on the test for capacity, Banks should be the yardstick used, as it is still good law until we hear otherwise.